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Reputation Formation in Bargaining. Partners vs. Strangers in the Ultimatum Game

  • Jan SauermannEmail author
Chapter
Part of the Jahrbuch für Handlungs- und Entscheidungstheorie book series (JAHAEN)

Abstract

The ultimatum game is certainly one of the most extensively studied games in experimental research, yet little is known about the effects of reputation formation in repeated bilateral bargaining. This study presents a laboratory experiment to examine the role of reputation formation by varying the matching procedure. Under partner matching, players interact with the same opponent repeatedly throughout the whole experiment, which allows players to build up a personal reputation. Under perfect stranger matching, subjects meet only once in the course of the experiment and thus, cannot form a reputation of being tough bargainers. The results show that in particular responder behavior is influenced by the variation of the matching procedure. In the partner matching treatment, responders demand a higher share than in the stranger matching treatment. However, this does not lead to decreased efficiency as proposers offer more and thus avoid costly conflicts. Overall, reputation formation strengthens the influence of fairness considerations.

Keywords

Ultimatum game Bargaining Reputation Matching procedure Laboratory experiment 

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Copyright information

© Springer Fachmedien Wiesbaden GmbH, ein Teil von Springer Nature 2019

Authors and Affiliations

  1. 1.Cologne Centre for Comparative PoliticsUniversität zu KölnKölnGermany

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